Essay by PaperNerd ContributorUniversity, Master's June 2001

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As the CEO founder of the debtor, I will have a few objections to the above arrangement. First, the bank now runs the company.


The Bank has all control and officers and directors have no power. Decisions might need to be made that cannot that would have been in the best interest of the company.


Since the type of partnership was not addressed in this question I am going to assume it is a general partnership. As a partner in a two-partner financial consulting firm, if my other partner spent money from clients' accounts I would be responsible for the missing money as well as she. Both my partner and I may be held liable jointly and severally for each other's wrongdoings. Each of us is a general partner and each has unlimited liability for the debts of the partnership. Each also has the power to incur obligations on behalf of the partnership within the scope of the partnership's business.

Therefore, each general partner acts as an agent for the other partner and the partnership.

If the company is a corporation and I am the CEO I would not necessarily be responsible for the losses. A corporation is a separate legal entity apart from the people who work there. If I knew what was going on then I would be responsible to act in the best interest of the corporation. During the decision making process, personal interest (financial and professional) must be subjugated to the interests of the corporation. If I did this then I would not be found responsible for the loss. This is because a CEO is protected from personal liability. If I committed the fraud then I could be held responsible.


The agreement between Marti and MediaSoft must first be legally enforceable. To be binding and enforceable the agreement must meet specific requirements. It must be ancillary to some other agreement; designed to protect a legitimate interest of the employer; reasonably limited in scope, geography, and duration; and not contrary to the interest of the public. Also, it must be supported by adequate consideration. This means that the person agreeing to the covenant must receive something of value from the other party. If the court finds that a legally valid covenant has been breached, the court may issue an injunction ordering the person to stop the offending activities and/or award damages in some cases.

In this case the contract seems to be not enforceable in either case because it does not have a legitimate interest stated. It only has a general interest in restricting competition, which is insufficient. Also, the agreement is not limited by geographical area and scope of activities affected, only time.

Based on a few assumptions that I have made about the contract that were not specified, MediaSoft should be able to enforce the agreement that Marti signed if she works for Net Ventures, LCC. In this agreement she agreed not to compete with her former employer for a two-year period of time after leaving. Prohibited competition includes dealing with business from the former employer, MediaSoft, and using MediaSoft's confidential business information for the benefit of the new employer. In this contract Marti agreed not to compete with MediaSoft and would be doing so by working for Net Ventures and its customers. This job would have her performing duties that would break her contract. She would be reading proposals for funding internet-based businesses (some which may be competitors of MediaSoft) and then pass on only the most promising ones to the committee that actually makes the funding decisions. This would not necessarily be breaking her agreement, however she would also be performing the task to serve on occasional management teams that Net Ventures puts in place of businesses it funds when those businesses begin to flounder. This would break her contract with MediaSoft. This advising and managing of certain floundering on-line businesses would clearly not be allowed according to the agreement she signed. Working on these management teams is clearly working for competitors. Also advising these floundering firms from her experience at MediaSoft for the benefit of her new employer during the two-year period is breaking her promise.

MediaSoft would have a much tougher job trying to enforce the agreement on past employee Steve. Steve is currently a high school teacher, teaching computer and technology classes. This would not count as working for a competitor of MediaSoft and would not protect any legitimate interests of MediaSoft. Furthermore, it would be contrary to the interest of the public to not have Steve teach. Assuming Steve is not making any disparaging remarks about MediaSoft, its founder, its officers, and/or its employees, he is within his contract.